Mucociliary clearance (MCC) is a defense mechanism that allows for clearance of foreign particles or microorganisms from the airways of the lung. Cilia in the respiratory tract move foreign particles and microorganisms out of the lungs on a film of airway liquid, or mucus. MCC dysfunction is common to several respiratory conditions, including cystic fibrosis (CF), bronchiectasis and chronic obstructive pulmonary disease (COPD)⁹⁹. Surfactant is a component of the airway surface liquid, contributes to its height and functionality, and promotes mucociliary clearance ^{100 101 102}. We believe that KL₄ surfactant has unique attributes, including potentially non-immunogenic, anti-inflammatory and anti-microbial properties. Further, we believe that, when these attributes are combined with a potential ability to enhance mucociliary clearance, KL₄ surfactant may advance the treatment of diseases with MCC dysfunction.

Although MCD is not currently an area of focus for Discovery Labs, the company believes it could be in the future, as we believe KL₄ surfactant may have MCC application across several different diseases, including, CF and bronchiectasis.

Our aerosolized KL₄ surfactant has been evaluated in an investigator-initiated phase 2a clinical trial in CF patients. The trial was conducted at the University of North Carolina and was funded primarily through a grant provided by the Cystic Fibrosis Foundation (CFF). The trial was designed to assess the safety, tolerability and short-term effectiveness (via improvement in mucociliary clearance) of aerosolized KL₄ surfactant in CF patients. Results were presented at the 2010 North American CF Conference. Trial investigators concluded that aerosolized KL₄ surfactant was safe and well tolerated in a CF patient population and that delivery of aerosolized KL₄ surfactant to CF patients was feasible. Since the completion of this trial, we have secured orphan drug designation in the US and EU for the treatment of CF with KL₄ surfactant.

There is a large unmet medical need regarding the treatment of CF, since there are currently no approved therapies that arrest the decline in lung function and the average life span for a CF patient is only 37 years. We believe that aerosolized KL₄ surfactant can be positioned as a potential compliment to current therapies, including inhaled antibiotics and other mucolytic drugs. The current pharmaceutical market for CF is over $1 billion per year (IMS Database, 2010) and the CFF estimates the annual cost of care for a CF patient is greater than $50,000 (CFF Website). If requested, we will continue to support independent initiatives that explore the utility of applying our KL₄ surfactant to address CF.